With the completion of the final post-Brexit transitional period around the corner, the UK is scrambling to secure multiple trade deals before the end of 2020. The Japan–UK free trade agreement (FTA) holds significance in boosting investments and diversified supply chain mechanism for both the countries with market growth opportunities, says GlobalData, a leading data and analytics company.
The investor-state dispute settlement (ISDS) provision, which enables the countries to settle disputes with foreign investors, was mutually excluded from the negotiation talks with an aim to reach the desired deal at the earliest, through a digital platform, amid the COVID-19 pandemic.
Japan is focused on defending the interest of its automobile industries, by seeking favorable tariff terms or the rate agreed in the EU agreement last year, whereas the UK is envisaging the dream of becoming Global Britain by seeking high-powered trade deals with the countries covering 80% of the UK market.
Prachi Gupta, Economic Research Analyst at GlobalData, states: “The UK has been the business hub of Japan for long and a gateway for the European market. The unfavorable future trade deals between the UK and EU could give rise to uncertainties for the Japanese businesses, regarding the supply chain disruptions towards the manufacturing and exports of automobiles in the region. The FTA will help Japanese industries in curbing the trade disruptions arising, after the end of transition period.”
The FTA is to set forth the steppingstone for Japan in becoming the full member of the ‘Five Eyes plus’ framework to strengthen the intelligence alliance, that shares the information on North Korea and China through its advanced technologies as the sixth eye. Moreover, the UK’s membership to the Comprehensive and Progressive Agreement of Trans-Pacific Partnership (CP-TPP) will benefit Japan in counteracting China’s influence over the region and luring the US at the negotiations.